Magnolia Petroleum Regulatory News (MAGP)

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 9 September 2013 Magnolia Petroleum Plc (`Magnolia' or `the Company') 75% increase in net production to 214 boepd & USD47m value assigned to net 2P Reserves by Competent Person Magnolia Petroleum Plc, the AIM quoted onshore US focused oil andgas exploration and production company, is pleased to report a substantialincrease in net daily production to 214 boepd and a further increase in thevalue of net attributable proved and probable reserves (`2P') to US$47m in anupdated Competent Person's Report (`CPR') by Moyes & Co. (`Moyes'). Thisupdate is in line with the Company's strategy to rapidly build production andreserves on its leases in oil rich formations including the Bakken, NorthDakota, and Mississippi Lime, Oklahoma. Highlights - 75% increase in net production to 214 boepd as at 1 August 2013 compared to 122.5boepd as at 31 December 2012 - Further growth anticipated - 18 wells under development and 35waiting to spud - US$47 million value assigned to Company's 2P reserves as at 1 August 2013 compared to US$2.2 million on Admission to AIM in November 2011 and US$44m in January 2013 - Based on upgraded net attributable oil and condensate 2P reserves of 1,437 Mbbl and net attributable gas 2P reserves of 5,124 MMcf - Only nine of 45 new wells announced between 1 January 2013 and 1 August 2013 commenced production and therefore contributed to the increase in 2P reserves - future upgrades expected as remaining and new wells are drilled and completed - Reserves estimate covers approximately 5,500 net acres out of total of over 13,500 in proven formations, such as the Bakken/Three Forks Sanish, North Dakota, and the Mississippi Lime, Hunton/Woodford, Oklahoma Magnolia COO, Rita Whittington said, "214 boepd at today's oil andgas prices generates significant revenues for Magnolia which in turn will bereinvested into drilling more wells to prove up the reserves on our leases inproven US onshore formations. With new wells due to commence production in thenear term, including four Statoil operated Jake wells in the prolificBakken/Three Forks Sanish reservoirs, and also several in which we have largerthan average interests such as the Blaser and Linda wells (9.375%) and theGreat White well (7.5%), we expect net production to continue to growstrongly. Increasingly new drilling activity is being funded using internallygenerated revenues and, as a result we are moving closer towards achievingself-funding status. "The increase in the value of our 2P reserves to US$47m furtherunderpins our current market capitalisation. With only nine of the 45 newwells announced between January and August 2013 commencing production duringthe period and therefore making a contribution this time round, the upwardtrajectory in the level of our reserves and revenues is set to continue. Inless than two years, we have grown Magnolia's daily production and value of 2Preserves from 7 boepd to 214 boepd and from US$2.2 million to US$47 millionrespectively. With over 600 potential drilling locations on over 13,500 netmineral acres in proven US onshore plays, we believe we are on course togenerate substantial value for all our shareholders." Summary of Magnolia Reserves As of 1 August 2013, Magnolia's net reserves, future net cash flowand net present worth discounted at 10% per annum (NPV) have been estimated tobe as follows: Grand Total as of August 1, 2013 Gross Reserves Net Reserves Net Cash Flow ReserveClass/Category Oil & Natural Oil & Natural Future Future Future Future NPV Condensate Gas Condensate Gas Net Net Net Net Disc @ (Mbbl) (MMcf) (Mbbl) (MMcf) Revenue OPEX & Capital Cash 10% ($000) Taxes ($000) Flow ($000) ($000) ($000)Proved 64,902 247,491 158 814 17,767 6,163 - 11,605 7,243DevelopedProducingProved 2,366 8,877 65 197 6,641 1,408 710 4,523 3,023DevelopedBehind PipeProved Shut - - - - - - - - -InProved 38,025 117,585 989 3,138 98,123 20,811 17,138 60,174 30,455UndevelopedTotal 105,293 373,953 1,211 4,150 122,531 28,381 17,848 76,302 40,721ProvedProbable - - - - - - - - -Behind PipeProbable 11,911 53,973 226 974 23,712 4,865 4,078 14,769 6,287UndevelopedTotal 11,911 53,973 226 974 23,712 4,865 4,078 14,769 6,287ProbableTotal 2P 117,204 427,926 1,437 5,124 146,243 33,247 21,926 91,070 47,008Possible - - - - - - - - -Behind PipePossible 22,333 66,961 1,497 4,863 148,901 31,551 27,782 89,568 33,950UndevelopedTotal 22,333 66,961 1,497 4,863 148,901 31,551 27,782 89,568 33,950PossibleTotal 3P 139,536 494,887 2,935 9,987 295,144 64,798 49,708 180,638 80,959 The estimates shown in this report are for proved developedproducing, proved non-producing, proved shut-in, proved undeveloped, probableand possible. This report does not include any value that could be attributedto interests in undeveloped acreage beyond those tracts for which undevelopedreserves have been estimated. The future net revenue is based on the 1 August 2013 NYMEX futuresstrip prices for WTI Oil and Henry Hub Gas. The future net cash flow is thefuture net revenue, less estimated future net OPEX (well operating cost andproduction taxes) and future net capital. The total reserves are those definedas natural gas and liquid hydrocarbon reserves to Magnolia's interest afterdeducting all royalties, overriding royalties, and reversionary interestsowned by outside parties that become effective upon pay-out of specifiedmonetary balances. All reserves estimates have been prepared using standardengineering practices generally accepted by the petroleum industry and conformto the guidelines adopted by the 2007 SPE/SPEE/WPC PRMS Guidelines. The information contained in this announcement has been reviewedand approved by P. Dee Patterson on behalf of Moyes & Co. Mr. Patterson has 32years of relevant experience in the oil industry and is currently ManagingDirector, with Moyes & Co. in Dallas, Texas. Glossary `1P' means Proved Reserves `2P' means Proved plus Probable Reserves `3P' means Proved plus Probable plus Possible Reserves `BOE' means barrels of oil equivalent, gas is converted at itsenergy equivalent of 6000 cubic feet per barrel of oil `BOEPD' means barrels of oil equivalent per day, `BOPD' means barrels of oil per day, Abbreviation for barrels ofoil per day, a common unit of measurement for volume of crude oil. The volumeof a barrel is equivalent to 42 US gallons `Contingent resources' means quantities of petroleum estimated asof a given date, to be potentially recoverable from known accumulations byapplication of development projects, but which are not currently consideredcommercially recoverable due to one or more contingencies `M' means Thousand `MBO' means Thousand Barrels of Oil `Mcfd' means Thousand Cubic Feet per Day `MM' means million (thousand thousand not million million), as usedin oilfield and heat content units such as MMSTB and MMBtu `MMBbl' means Million barrels `MMcfd' means Million Cubic Feet per Day `Proved Reserves' means those quantities of petroleum which, byanalysis of geological and engineering data, can be estimated with reasonablecertainty to be commercially recoverable, from a given date forward, fromknown reservoirs and under current economic conditions, operating methods, andgovernment regulation - Proved reserves can be categorized as developed orundeveloped `Probable reserves' are those unproved reserves which analysis ofgeological and engineering data suggests are more likely than not to berecoverable. In this context, when probabilistic methods are used, thereshould be at least a 50% probability that the quantities actually recoveredwill equal or exceed the sum of estimated proved plus probable reserves `Possible Reserves' are those unproved reserves which analysis ofgeological and engineering data suggests are less likely to be recoverablethan probable reserves. In this context, when probabilistic methods are used,there should be at least a 10% probability that the quantities actuallyrecovered will equal or exceed the sum of estimated proved plus probable pluspossible reserves Reserve Status Categories `Unproved Reserves' are based on geologic and/or engineering datasimilar to that used in estimates of proved reserves; but technical,contractual, economic, or regulatory uncertainties preclude such reservesbeing classified as proved. Unproved reserves may be further classified asprobable reserves and possible reserves Reserve status categories define the development and producingstatus of wells and reservoirs `Developed reserves' are expected to be recovered from existingwells including reserves behind pipe. Improved recovery reserves areconsidered developed only after the necessary equipment has been installed, orwhen the costs to do so are relatively minor. Developed reserves may besubcategorised as producing or non-producing. `Producing reserves' are expected to be recovered from completionintervals which are open and producing at the time of the estimate. Improvedrecovery reserves are considered producing only after the improved recoveryproject is in operation. `Non-producing reserves' include shut-in and behind-pipe reserves.Shut-in reserves are expected to be recovered from (1) completion intervalswhich are open at the time of the estimate but which have not startedproducing, (2) wells which were shut-in for market conditions or pipelineconnections, or (3) wells not capable of production for mechanical reasons.Behind-pipe reserves are expected to be recovered from zones in existingwells, which will require additional completion work or future recompletionprior to the start of production. `Undeveloped reserves' are expected to be recovered: (1) from newwells on undrilled acreage, (2) from deepening existing wells to a differentreservoir, or (3) where a relatively large expenditure is required to (a)recomplete an existing well or (b) install production or transportationfacilities for primary or improved recovery projects. An abridged version of the CPR will be available for download fromthe Magnolia website www.magnoliapetroleum.com in due course. * * ENDS * * For further information on Magnolia Petroleum Plc visitwww.magnoliapetroleum.com or contact the following: Steven Snead Magnolia Petroleum Plc +01 918 449 8750Rita Whittington Magnolia Petroleum Plc +01 918 449 8750Jo Turner / James Cairn Financial Advisers +44 20 7148 7900Caithie LLPJohn Howes / Alice Northland Capital Partners +44 20 7796 8800Lane / Luke Cairns LimitedLottie Brocklehurst St Brides Media and Finance +44 20 7236 1177 LtdFrank Buhagiar St Brides Media and Finance +44 20 7236 1177 LtdNotes Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gasexploration and production company. Its portfolio includes interests in 121producing and non-producing assets, primarily located in the highly productiveBakken/Three Forks Sanish hydrocarbon formations in North Dakota as well asthe oil rich Mississippi Lime and the substantial and proven Woodford andHunton formations in Oklahoma. Summary of Wells Category Number of wellsProducing 121Being Drilled / Completed 18Elected to participate / waiting to 35spudTOTAL 174